FinTech is, undoubtedly, the fastest growing sector in the European startup landscape, “in the first half of 2018, investment in FinTech companies in Europe alone reached US$26 billion”. Indeed, on the contrary of what we have noticed in other sectors, European FinTech startups are performing better compared to their American counterparts. Companies like the German online bank N26 have been able to reach an evaluation of $3.5bn being, like the Swedish payment Klarna and the British digital bank Revolut examples of European Unicorns.
The FinTech industry has attracted a higher amount of funding compared to other sectors, not only in Europe, but also worldwide. The Financial sector has always attracted, for its very nature, capital, talent, and cutting-edge technology. Innovative approaches like hackathons are used by already more established financial institutions to win the war of talent, but also to partner with startups. Recently, as a result of changes in regulation, new avenues for innovation have been opened up in FinTech. For example, with the coming into effect of PSD2, Open Banking is now a solid industry trend. The use of APIs is agreed upon to be the most practical way of fulfilling PSD2 requirements before its deadline on September 14th, 2019. Many are therefore startups engaging in this APIs economy.
Indeed, as we have seen, the European FinTech ecosystem has considerable potential but it is also facing some challenges. European FinTech-related legislation is fragmented and therefore complex to understand, especially from a startup perspective. It is in this context that Data Market Services (DMS) will provide entrepreneurs with meaningful assistance by providing them free training on IPR and GDPR topics. These issues intersect with many of the cybersecurity challenges that FinTech startups are facing and will have to deal with in the future to guarantee the highest standard of safety to their customers.